It seems as ifApple wants to be a TV star after all. Variety is reportingthat the consumer tech giant has been in talks with Hollywood studio executives. Talks are still preliminary, but the goal appears to be for Apple to bankroll original content in a bid to arm itself with enough exclusive programming to take on Netflix and other streaming services.
Shares of Netflix naturally opened lower on the news. Apple is Apple. It's a tastemaker. It's a game changer. It has more cash in the bank than any other company on the planet.
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However, before we crown Apple as the victor of a war that it hasn't even entered, let's take a look at some of the reasons why Netflix investors don't need to start feeling nervous.
1. "What's in the box?" -- Brad Pitt in Se7enApple is hosting its next product unveiling on Sept. 9, and while it's widely expected to be the debut of the next iPhone, there's also some chatter about it serving as the springboard for the next generation of Apple TV.
Apple's set-top device has been a decent performer in this niche, but not the mass market category killer that it could have been in a market dominated by cheaper gadgetry. One would think that a subscription-based streaming platform would be tied to Apple TV, but if the new content offering is being used as a way to make Apple TV stand out -- and reportedly at a higher price point than the current set-top box -- that exclusivity could also be a deal breaker.
Netflix became the undisputed champ of premium streaming with 65.5 million subscribers worldwide because it's available in many different ways. Video game consoles, Blu-ray players, smart TVs, and any set-top device that matters offer Netflix access. The app is easily accessible on any mobile or desktop device. If Apple TV's streaming TV offering is limited to its own box or even its own iOS, it's as good as toast.
2. "You come at the king, you best not miss." -- Omar in The WireTech giants have a funny way of thinking that they can dominate an industry with dedicated leaders, but that hasn't historically been the case. We've seen all of the tech heavyweights -- Apple included -- make a play for streaming music, failing to make a dent in the niche leaders.
Apple is a titan of tech with gobs of dough and a mainstream hardware hit, but the same thing could be said about the Xbox, and last year it pared back its once-ambitious dream of running a production studio to put out exclusive content.
Being Apple isn't enough, and in some cases, being an established tech behemoth can be more of a liability than an asset.
3. "None of us are the same as we were a moment ago." -- Scarlett Johansson in HerOne of the last things that Steve Jobs told his biographer before he died was that Apple had cracked the code when it comes to TV, and it's now been nearly three years since CEO Tim Cook declared TV "an area of intense interest" in an NBC television interview.
That may all have been true, but three to four years is an eternity in this rapidly evolving market. Apple has been too slow to embrace streaming TV as a subscription service. Netflix's subscriber base has nearly tripled since Jobs "cracked it," and even some traditional pay-TV providers have entered this niche before Apple.
Apple fans will argue that the class act of Cupertino doesn't have to be first -- it just needs to get it right. That's true, but if we've learned anything with the less-than-spectacular Apple Music makeover and Apple Watch post-launch hype, it's that Apple can also be mortal. If Apple gets too cocky by either making a platform too exclusive or pricing itself out of reach, it will have to settle for a thin slice. Outside of an outright buyout of Netflix, gutting Apple TV as a hardware platform, or sacrificing near-term margins for the sake of ramping up the mother of all digital catalogs, it will be hard to take an Apple premium streaming TV platform seriously as a category killer.
The article 3 Reasons Why Apple TV Isn't the New Netflix originally appeared on Fool.com.
Rick Munarriz owns shares of Netflix. The Motley Fool owns and recommends Apple and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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